Ch03 - How Fast Should Your Company Grow Almost every...

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How Fast Should Your Company Grow? Almost every business owner intuitively knows that their business can grow too fast even if the company is well managed during the growth period. Also, advisors to smaller firms have learned by experience that many firms that fail do so in the year of their highest sales . What is needed is the ability to calculate the rate of sales growth that a particular business can afford so that realistic growth objectives can be established. Professor Robert Higgens of the University of Washington has developed a simple technique for calculating the sustainable growth rate (SGR) for a company that can be easily used by business owners and managers. Once the sustainable growth rate has been computed, management can see whether growth objectives are realistic, and incorporate techniques to find solutions when desired growth is higher than the affordable rate for the company. The Model
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